HomeMy WebLinkAbout2004-06-01 City CouncilCity of Palo Alto
City Manager’s Repor
TO:HONORABLE CITY COUNCIL
ATTENTION:FINANCE COMMITTEE
FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE
SERVICES
DATE:JUNE 1, 2004 CMR: 285:04
SUBJECT:THIRD QUARTER FISCAL YEAR 2003-04FINANCIAL
RESULTS
This is an informational report and no Council action is required.
BACKGROUND
The purpose of this report is to provide the Finance Committee with insight into the
financial condition of the City’s General Fund (GF) as of the third quarter of 2003-04.
DISCUSSION
Revenue Highlights for Third Quarter Fiscal Year 2003-04 Financial Results
Attachment A shows third quarter year-to-date actual revenues as a percentage of the
Adjusted Budget. One would expect that by the end of the third quarter, the City would
receive 3A or 75 percent of projected revenues. In fact, due to seasonal, State and county
payment schedules, and other timing variations, revenues reflected in the City’s General
Ledger may not represent three quarters of activity. It is only when the City "closes its
books" at year-end that performance compared to budget can be realistically assessed.
Nevertheless, staff has attempted to describe variances that are at least 5 percentage
points below the 75 percent level and to comment on whether budget goals will be met in
these categories.
Transient Occupancy Taxes (TOT)."
Attachment A shows that transient occupancy taxes are 61 percent of the Adjusted
Budget. The primary reason for this variance is that the City’s General Ledger reflects
revenues through February instead of March. Staff estimates that with March revenues,
the City has received nearly 70 percent of budget. The remaining variance is a result of
CMR:285:04 Page 1 of 4
low room rates charged by hotels to attract customers in a weak economy. The average
daily rate through March has been $113 compared to $123 for the same period last year.
On a positive note, February and March data indicate that occupancy and daily rates are
beginning to steady and move marginally higher. Average occupancy rates for the past 6
months have exceeded those in the prior year and, more importantly, average room rates
have moved from a low of $97 in December to a yearly high of $125 in March. Staff is
hopeful that final quarter receipts will close part of the variance cited above.
Property Taxes."
Property taxes also show that 61 percent of budget revenues have been received. Taking
into account a late entry that belongs in March~ actual receipts jump to 68 percent of
budget. Because of a timing issue whereby the county makes a final reconciliation
payment in late June and based on property tax receipts through the first half of the year,
staff believes actual receipts at year-end will be close to the adjusted budget of $14.1
million.
Sales Tax:
Sales tax receipts through March are 72 percent of budget. As with TOT, this
economically sensitive and important revenue source has been weaker than expected due
to the extended economic downturn. All economic segments have performed poorly in
2003-04 with special emphasis on automobile sales. Although the rates of decline in the
past two quarters compared to prior year quarters has gone down and local economic
conditions are slowly improving, staff foresees continued softness in final quarter sales
tax revenues. This would lead to year-end revenues below budget.
Charges for Services:
Charges for services receipts are 70 percent of adjusted budget as of the third quarter.
With two large projects expected to remit plan check fees in the near future, this category
of revenue is expected to reach its $17.4 million projection at year-end.
Permits and Licenses."
Permits and licenses receipts are 46 percent of the $4.2 million adjusted budget. The $1.2
million variance is primarily due to delayed processing of the new Public Works
Department street cut fee ($0.7 million) and cyclical delay in payments of building permit
fees. Revenues are expected to reach the adjusted $4.2 million by year-end.
Other Revenues:
Other revenues are 40 percent of budget or $0.6 million below projection. This variance
is primarily due to delays in receipt of grant payments for capital projects. These
payments are expected to be received by year-end.
CMR:285:04 Page 2 of 4
Expense Highlights for Third Quarter Fiscal Year 2003-04 Financial Results
Just as revenues are cyclical in nature, so too are some expenditures. Given that the
percentage of adjusted budget used could include commitments for the entire fiscal year,
departments are within their expected target range. By year-end, staff expects that
department actual expenditures will meet their adjusted budget goals.
Excess of Overtime Expenditures to Adjusted Budget
General Fund Overtime .dnalysis."
Attachment B shows total overtime expenditures reaching 102 percent of adjusted
budget. Although most of the General Fund Departments are below or close to 75
percent of their overtime budget, the Police, Fire and Human Resources Departments
exceed their budget for the following reasons.
The Fire Department is at 118 percent of adjusted budget for overtime. The Fire
Department is expecting to receive reimbursement of $91,000 from the Southern
California fires. With this reimbursement, the adjusted excess of actual overtime
over budget is 108 percent. However, savings in regular salary expenditures due
to vacancies will offset excess overtime. As of 3/31/04, the Fire Department has
used 75.4 percent of the adjusted budget for total "Salaries and Benefits"
expenditures.
The Human Resources Department is at 350 percent of adjusted budget for
overtime; although the percentage is high, the dollar amount is only $4,000. The
excess overtime was due to SAP implementation of Phase II, HR/Payroll module.
Conversion of master data for HR/Payroll process had to be processed between the
last pay period of the previous calendar year and the first pay period of the current
calendar year. Use of overtime was the only option to meet this critical deadline.
As of 3/31/04, the Human Resources. Department has used 78.6 percent of the
adjusted budget for total "Salaries and Benefits" expenditures.
The Planning Department is at 88 percent of adjusted budget for overtime.
However the excess of actual overtime over budget is offset in salary savings. As
of 3/31/04, the Planning Department has used 73 percent of the adjusted budget
for total "Salaries and Benefits" expenditures.
The Police Department is at 103 percent of adjusted budget for overtime. The
Police Department has received reimbursement of approximately $50,000 from
Stanford University football games and the IKEA store opening. With this
reimbursement, actual overtime equals 98 percent of adjusted budget. Savings in
salary expenditures due to vacancies offsets excess overtime. As of 3/31/04, the
CMR:285:04 Page 3 of 4
Police Department has used 68.6 percent of the adjusted budget for total "Salaries
and Benefits" expenditures.
ENVIRONMENTAL REVIEW
The action recommended is not a project for the purposes of the California
Environmental Quality Act.
ATTACHMENT
Attachment A:
Attachment B:
PREPARED BY:
2003-04, Third Quarter Financial Report, General Fund
2003-04, Third Quarter General Fund Overtime
TRUDY ~’
Accounting Manager, Administrative Selwices
JOSEP~S~~A~IO~~
Deputy33irector, Administrative Services
Director, Adlrninistratix e Serx ices
CITY MANAGER APPROVAL:
HARRIS(~N
Assistant City Manager
CMR:285:04 Page 4 of 4
Attachment A
CITY OF PALO ALTO
2003-04 Q3 FINANCIAL REPORT
GENERAL FUND
(in thousands of dollars)
Revenues & Other Sources
Sales Tax
Property Tax
Transient Occupancy Tax
Utility Users Tax
Other Taxes and Fines
Charges for Services
Permits & Licenses
Return on Investment
Rental Income
From Other Agencies
Charges To Other Funds
Other Revenues
19,335 17,490 12,476
13,556 14,100 8,597
6,300 5,549 3,409
7,498 7,300 5,314
6,724 9,305 7,390
17,638 17,385 12,090
4,762 4,214 1,941
3,600 3,600 2,609
11,658 11,658 8,678
102 244 328
8,816 8,816 6,644
1,692 1,711 689101,681 101,282!"1 "1 70,165t
14,476 14,383 10,647
4,278
5,068 5,557121,225 125,5001 " !" I 80,8121
Total Revenues
Operating Transfers-In
Encumbrances and Reappropriation
From Infrastructure Reserve
Total Sources of Funds
Expenditures & Other Uses
City Attorney
City Auditor
City Clerk
City Council
City Manager
Administrative Services
Community Services
Fire
Human Resources
Planning and Community Environment
Police
Public Works
Non-Departmental
Total Expenditures
Operating Transfers-Out
2,304 3,136 40 689 1,774
766 967 -88 506
1,010 1,063 -28 710
279 282 -10 149
1,637 1,775 1 42 1,308
6,479 6,889 50 266 5,270
24,946 25,616 670 2,227 17,665
18,917 19,054 11 365 14,073
2,263 2,484 116 162 1,676
8,946 10,279 52 884 6,372
23,609 24,007 106 494 16,383
11,348 11,634 43 895 7,712
6,459 6,333 --4,411
108,963 113,519 I 1,089 I 6,150 I 78,009
11,747 !2,106 -7,959
Total Uses of Funds 120,710 125,625
Net Surplus (Deficit)515 (125)
Adjust intra-fund reserve transfer (5,068)(5,557)
Net To (From) Reserves (4,553)(5,682)
Beginning Reserves 54,834 61,129
Projected Ending Reserves 50,281 55,447
72%
61%
61%
73%
79%
70%
46%
72%
74%
134%
75%
40%
69%!
o%
o%
64%
80%
61%
69%
56%
76%
81%
80%
76%
79%
71%
71%
74%
70%
75%
66%
1,0891 6,1201 85,9s81 74%
Attachment B
CiTY OF PALO ALTO
2003-04 Q3 FINANCIAL REPORT
GENERAL FUND OVERTIME
(in thousands of dollars)
City Attorney
City Auditor
City Clerk
City Council
City Manager
Administrative Services
Community Services
Fire
Human Resources
Planning and Community Environment
Police
Public Works
Total Overtime
4
62
274
975
2
67
948
100
2,445
4
62
253
975
2
67
968
100
2,444
1
17
196
1,146
7
59
997
77
2,503
0%
0%
23%
0%
25%
27%
77%
118%
350%
88%
103%
77%
102%